April 6, 2009 / 2:28 PM / 10 years ago

CANADA STOCKS-TSX drops as banks, gold and oil turn lower

* TSX down 75.87 points at 8,989.89

* U.S. bank commentary shakes financials

* Lower commodity prices also drag

By Frank Pingue

TORONTO, April 6 (Reuters) - Toronto’s main stock index was lower on Monday morning as a U.S. analyst’s note sapped optimism about the bank sector, while lower gold and oil prices also weighed on the resource heavy index.

The index’s financial sector, home to Canadian banks and insurers, fell 0.5 percent after a Calyon Securities analyst initiated coverage on some large U.S. banks with an “underperform” or “sell” rating, citing risk-taking by banks in several areas. [ID:nWNAB0973]

Shares of Royal Bank of Canada (RY.TO) dropped 1 percent to C$38.05, while Toronto-Dominion Bank (TD.TO) shares fell 1.3 percent to C$45.57.

The lower start for the index follows four weeks of higher closes that started after it hit its lowest level in five years.

“One of the analysts in the States came out and said that loan losses at the banks could be worse than the Great Depression in the ‘30s, so that’s having a detrimental effect on the market today,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

“I still think there is some weakness coming in the market and the rally that we’ve been experiencing has been more of a bear market rally more then anything else.”

The energy sector was down 1.6 percent as the price of oil, a key Canadian export, was down below $51 a barrel, while lower gold prices sent the materials sector down 3.75 percent.

At 10:05 a.m. (1405 GMT), the S&P/TSX composite index .GSPTSE was down 75.87 points, or 0.76 percent, at 8,989.89. Five of the TSX’s 10 sectors were lower.

$1=$1.24 Canadian Editing by Peter Galloway

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